New US Tariff Proposals Would Hit UK Economy

William Bain Head of Trade Policy

“THESE new proposals for reciprocal and differential tariffs will create more cost and uncertainty for investors, businesses and consumers across the world. 

“Plans to factor in countries’ VAT regimes could lead to especially complex and costly tariff scenarios which upend established trade norms. 

“It is vital that the UK Government does not get sucked into a trade war of tit-for-tat tariffs, which could easily spiral out of control. 

“It will need to adopt a flexible and agile response, while assessing the reaction of other major players. 

“But it must make the most of the time available before the introduction of these tariffs to negotiate with the US on alternative arrangements. 

“If they do not, then sectors such automotives, pharmaceuticals, and food and drink could be significantly hit as higher tariffs inevitably feed through into globally higher prices for consumers. 

“Our services exports with the US won’t be subject to these tariffs and are far higher than our goods exports, giving UK trade a level of insulation. 

“Nevertheless, we would urge the UK Government and US Administration to quickly open negotiations and focus on ways to build upon our bilateral trade of £300bn per annum. We must make the case for pro-growth exemptions from proposed tariffs to benefit UK-US trade. 

“There is no disguising it has already been a tough start to the year for business. Cost pressures are ramping up, confidence is down, and government pledges to unlock growth are yet to bear fruit.  

“Ministers must now leave no stone unturned in their quest to develop a robust economic environment to support high levels of employment, investment, and growth.” 

The Hull and Humber Chamber’s External Affairs Director, David Hooper, said: “President Trump is proving to be even more unpredictable in his second term than many observers had feared as he tries to bring his business negotiating tactics to the international stage.

“For the US to ignite trade wars with trading partners around the globe is a huge concern, and in nobody’s interests, but the UK seems to be less exposed to their effects than some, particularly when it comes to steel.

“The Chamber was at the British Steel site in Scunthorpe last week to hear the announcement from Heathrow of its agreement with the firm to supply much of its steel requirements as it builds its third runway in the coming years, as Industry Minister Sarah Jones MP promised to clear the bureaucratic way for work to begin. Using more of our steel in the UK has got to be a help.

“The other good news for UK firms is that our services exports with the US aren’t affected by these tariffs and are higher than our goods exports, but for businesses in that sector, it is understandably unhelpful.

“These extra challenges only add to the pressures many firms face with the Chancellor’s tax rises looming large in April which themselves will add significant costs to many businesses which are already under strain.

“The Prime Minister seems to have a good relationship with President Trump so far, let’s hope he can use that to protect the UK’s exporters and minimise any tariffs for UK firms.”